Martin Schulz helped set the tone for Brexit by calling on the UK government to make Britain’s exit swift.
Photograph: Alastair Grant/AP

Martin Schulz, the head of the European parliament, has announced he is leaving EU politics to seek a seat in the German Bundestag, fuelling speculation that he could enter the race to challenge Angela Merkel in next year’s federal elections.

The Social Democrat will stand for the party in his native North Rhine-Westphalia in the 2017 general election and is almost guaranteed a seat in the German parliament as head of the SPD list for the region.

Born near the German-Belgian-Dutch border, he has also been a staunch defender of the EU’s principle of free movement of people, insisting it cannot be compromised as part of any single market deal. “I refuse to imagine a Europe where lorries and hedge funds are free to cross borders but citizens cannot,” he said recently.

He had served an unprecedented two terms at the head of the parliament but was considered unlikely to win a third when a reshuffle of top positions begins in January.

Sigmar Gabriel, currently deputy chancellor in Germany’s coalition government, and Hamburg mayor Olaf Scholz are seen as other potential challengers. The SDP plans to announce its candidate in late January.

Schulz’s departure is unlikely to have any impact on Brexit negotiations, however. The next European parliament president, expected to be drawn from the dominant centre-right group, will almost certainly stick to the same red lines. Guy Verhofstadt, the parliament’s Brexit negotiator, will also ensure continuity.

Schulz and Juncker, who infuriated MEPs by suggesting his friend should stay until 2019. Photograph: Olivier Hoslet/EPA

Speculation over Schulz’s future has been running high since Jean-Claude Juncker, the president of the European commission, argued that his friend should lead the parliament until 2019 to guarantee stability. Juncker’s intervention infuriated MEPs by flouting a deal that the presidency should pass to the centre right.

Following European elections in 2014, senior MEPs agreed, in line with tradition, that the presidency of the parliament would be shared between the parliament’s two largest groups: the centre-right European People’s party and the Socialists. As Schulz’s two and a half year term came to a close, there was growing anxiety he would tear up the agreement. Senior EPP MEPs had sworn to oppose him if he attempted to stay.

Schulz, a former bookseller who was first elected to the European parliament in 1994, said it had not been an easy decision to go. He vowed to continue fighting for the EU in national politics.

The frontrunner to succeed him will become clear in December, when the European parliament holds elections to choose a candidate. France’s Alain Lamassoure and Ireland’s Mairead McGuinness are seeking the centre-right nomination. MEP Antonio Tajani, an ally of Silvio Berlusconi, who was Italy’s European commissioner, is also expected to throw his hat into the ring.

Smaller groups attacked the “backroom stitchup” that guarantees the presidency passes between the two largest groups. Syed Kamall, the British Conservative who leads a Eurosceptic centre-right group, said Schulz’s departure was an opportunity for MEPs to rethink how they choose their president.

“With the figurehead of the European parliament’s backroom dealing now leaving, the grand coalition should seriously ask if its conduct is increasing or undermining people’s perceptions of the European parliament,” he said. His group, the European Conservatives and Reformists, announced that Belgian MEP Helga Stevens would be their candidate for president.

But with pro-EU MEPs holding two-thirds of the seats, it is unimaginable that a Eurosceptic could win.

The parliament’s 751 MEPs, including the 73 MEPs from Britain and Northern Ireland, will elect the new president in January.

Committee chairs can serve a five-year term, but the halfway reshuffle is a chance to clear the decks. Some MEPs have been pressing for Britain to relinquish these influential positions, now the UK is on the way out.